Dealer

Any individual or firm, other than a bank, that is engaged in the buying and selling of securities for itself.

Death Spiral Deal

A convertible security where the conversion price is tied to the market price (frequently at a fixed percentage discount) at the date of conversion. Also known as a ‘Toxic Convert’.

Debenture

A note or bond usually backed only by the general credit of a company, and not secured by specific property.

Debenture, Subordinated

See ‘Subordinated Debenture’.

Debt

A fixed obligation to pay money at a stated time.

Debt Capital

Capital raised through the issuance of bonds.

Debt Financing

Financing by selling bonds, notes, or other debt instruments.

Debt Ratio

Debt capital divided by total capital.

Debt/Equity Ratio

A measure of a company’s leverage, calculated by dividing long-term debt by common shareholders’ equity.

Default

Failure to discharge an obligation when due.

Defined Contribution Plan

(USA) A retirement plan in which the employer’s obligation is to make a definite contribution into the plan and the employee bears the risk of investment performance by the retirement plan. In the UK, such plans are known as defined contribution pensions or personal pensions. A defined contribution plan is the opposite of a defined benefit plan where the employer’s obligation is to make a definite payment to the retired employee and the employer bears the risk of investment performance by the retirement plan. In the UK, this is known as a defined benefit or final salary pension scheme.

Delisting

The removal of a company from listing on a stock exchange, either because the company no longer satisfies certain minimum financial or market capitalisation standards or because the company violated one of the rules or regulations of the exchange.

Demand Registration Rights

(USA) The contractual right of a security holder to require an issuer to file a registration statement to register the holder’s securities so that the holder may sell them in the public market without restriction. See ‘Piggy-Back Registration Rights’ and ‘Registration Rights’.

Depository Trust Company (DTC)

(USA) DTC is the world’s large

Derivative or Derivative Security

A financial instrument or security whose characteristics and value depends upon the characteristics and value of an underlying instrument or asset, typically a commodity, bond, equity, or currency. Examples include futures, options, and mortgage-backed securities.

Development Stage Capital/Fund

Venture capital financing in connection with a company’s start-up phase. This is typically the highest risk phase of venture capital financing from the investor’s perspective. A ‘development stage fund’ is a venture capital fund focusing on development stage financing. See ‘Mezzanine Capital/Fund’ and ‘Pre-IPO Capital/Fund’.

Diluted Earnings Per Share

See ‘Fully Diluted Earnings Per Share’.

Dilution

A decrease in the value of securities as the result of the issuing, or potential issuing, of additional securities.

Distribution

The sale of a block of securities to a number of investors. Often this is accomplished through a syndicate of investment banks or stock brokers that buy the securities from the underwriter or underwriters and sell them on to their clients.

Double Dip

Generally refers to participating preferred stock that entitles a holder to a liquidation preference and also to participate in the residual value. See ‘Participating Preferred Stock’.

Dow Jones Industrial Average (DJIA)

An index based on 30 major stocks listed on the New York Stock Exchange. The companies included in the DJIA are all major factors in their respective industries, and their stocks are widely held by individuals and institutional investors. The DJIA is one of the oldest and most widely recognised stock indices and has been published daily for more than 100 years.

Down Round

A round of equity financing at a valuation lower than prior rounds of financing. Also referred to as a ‘punitive round’.

Drag-Along Rights

See ‘Bring-Along Rights’.

DTC

See ‘Depository Trust Company’.

Dual Listing or Trading Facility

The listing of a security on more than one exchange. Increasingly, securities are being listed on both a local exchange and an exchange with more widespread coverage. In addition, issuers may list on both a US exchange and a European or Asian exchange.

Due Diligence

An examination of the books and records of an issuer and interviews with officers, partners, etc., to confirm information about the issuer’s business as well as legal and accounting affairs. It typically includes a review of such matters as significant customers and suppliers, the background of key employees (to learn of prior employment problems, criminal convictions, disciplinary actions by market regulators, fraudulent r?sum?s), material contracts; facilities; real property owned, subsidiaries, judgments and lawsuits, insurance; patents and other intellectual property rights; licenses and permits, and tax status. The phrase derives from the fact that under USA law certain persons (including the directors, underwriters, and auditors) are personally liable for a misstatement of material fact in a registration statement unless they can demonstrate that after reasonable investigation they had reasonable grounds to believe, and in fact did believe, that the statement was true. Conducting the due diligence examination enables these persons to raise a ‘due diligence defence’ if sued.